A summary of the digital dilemma and its effect on the way businesses are operating today.

The Digital Dilemma
Whether you’re a start-up or an established brand, every business owner will be required to make an important decision in the course of their business venture; to go digital or not to go digital. In today’s day and age, businesses cannot turn away from the fact that this binary decision will determine the livelihood and the future of the brand itself. Thankfully, there is a middle ground more commonly known to those in the industry as the ‘modern marketing strategy’.

A smart business owner will understand that both internal and external marketing factors play a role in individual business success. According to research and consulting company, Strategy Analytics, spending for digital advertising in the Asia Pacific region has increased over the past year by 18.2% – that’s an estimated total of AU$78.4 billion.

This poses the ultimate question: if a majority of businesses are competing in the digital market, why isn’t your business? Furthermore, how do we, as business owners compete against others who seem to be employing the same traditional marketing strategy? The modern marketing strategy attempts to explain this.

The Modern Marketing Strategy
Ever heard of the saying ‘don’t put all of your eggs in one basket’? The modern marketing strategy explores this notion. Although there are many theories surrounding this, our experience here at Bonfire is what drives the thought behind this strategy.

Time and time again we see businesses come to us seeking SEO and other online digital services who understand the importance of digital for a competitive business strategy, however this is not always the case. The modern marketing strategy explains the need for the integration between traditional marketing efforts, digital marketing efforts and all other areas of the business including marketing goals and product mix. Each marketing component should work cohesively in order to play off each other’s strengths and enhance the overall business strategy. If one element were to change, it’s integral for the other elements to adapt. For example, if the business decided to rebrand, this should filter through to all digital efforts as well as traditional marketing efforts.

However, for many businesses today who don’t necessarily have the resources to fund their own marketing department, it can be difficult to maintain a consistent strategy. This is where outsourcing comes into play – not to a cheap, offshore “agency” – but to an established digital agency who knows exactly what it means to have a strong digital campaign and has the skills to seamlessly integrate these into the overall marketing strategy.

With many markets facing over-saturation and with a large number of businesses struggling to penetrate or compete at a profitable level, employing an effective modern marketing strategy is almost essential for survival.

In today’s complex world, businesses can either sink or swim. With this in mind, digital agencies have now become the buoys of the modern business world, giving rise to a new era in marketing: The Digital Era.

The recently announced 2016/17 Federal Budget has again shone the spotlight on multi-national tax avoidance, otherwise known as “Google Tax”.

The government plans to put in place a number of measures that will help it secure almost $4 billion dollars in “lost tax” from Australia’s top multi-national companies including Google and Apple by July 2020.

As a start, the Australian Tax Office (ATO) is getting $679 million over four years to fund a 1,300 person taskforce to ensure multinationals, private companies and wealthy individuals pay the right amount of tax.

Beginning July 2017, the tax system will also get a new Diverted Profits Tax law. The regulation will impose a penalty rate of tax at 40% on large multinationals that are found to have attempted to shift Australian profits offshore to avoid paying tax. This law is a follow on from the Multinational Anti-Avoidance Law which was passed in December last year.

A similar law was introduced in the UK recently and forced Google to agree to pay the UK government £130 million in back taxes.

In Australia, the issue with Google arises by it booking its advertising revenue from Australia in Singapore where the tax rate is lower, therefore not counting income it earns through advertising locally.

Google has already made progress to rectify this issue. Google’s Australian business restructured at the beginning of January 2016 so that it now recognises revenue from the marketing and selling of certain services and products to Australian based customers.

While for the everyday Australian an extra $4 billion in the coffers is an attractive prospect, what implication will this have for Australian advertisers?

Advertisers and agencies will be keen to see whether the new tax will have an effect on the advertising rates they pay to Google. For example, would Google pass on this cost to advertisers by increasing CPC rates on AdWords campaigns? If the cost is passed on, this is likely to have quite an impact on the marketing budgets of businesses across Australia.

Google says that in 2015 it’s workforce grew to around 1200 people in Australia and the company invested more than $400 million into its Australian operations. If this new tax encouraged Google to shutdown operations and move offshore, it could have dire consequences for Australian advertisers and agencies alike.

So we wait with baited breath for the July 2nd election result to see if these laws will become a reality.

In 2015, Australian digital advertising spend increased 25% over the previous year and cracked $6 billion.

What makes this news such a milestone is the fact that it’s the fifth consecutive year of double-digit growth for the industry.

It’s news that doesn’t surprise our CEO, Clay.

This news solidifies the fact that advertisers have ‘seen the light’ and are investing more heavily in digital as it provides more opportunities to reach consumers. From mobile, to video and display advertising, digital is one of the few forms of advertising that continues to innovate and consistently deliver measurable results.

He has shared this thoughts on the news and where digital is heading with Campaign Brief.

Any business that sells goods or services online will know all to well that eCommerce is well and truly thriving in Australia at the moment.

We certainly live in the lucky country and our online retail spending figures are proof of that. Here are just some of the recent statistics to be released (see infographic below):

71% of Australian consumers have made a purchase online

Online sales revenue in Australia is expected to reach more than $37bn during 2013

53% of users buy from Australian E-Commerce Sites instead of overseas sites

73% of online users in the age group of 35-44 have shopped online

$2,108 is the average spend of each online customer in Australia

Credit card and Paypal remain the most popular payment methods

These statistics won’t surprise many of the e-retail front-runners who know that staying ahead of the game in online retail is a never-ending race of investment in new technology and innovative marketing strategies.